TWNK - Earnings call transcript Q1 2021

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Operator

Greetings. Welcome to Hostess Brands First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the to turn ICR. Mandeville now would conference Chris over with I you. Thank

You may begin.

Chris Mandeville

welcome first Hostess conference morning, to Good and Brands' call. quarter earnings XXXX

President period everyone morning AM should Joining Callahan, access out to Purcell, call this today's release have XXst, Financial and for Eastern XXXX earnings Brands’ went the Chief now, me XX:XX Brian March CEO; Time. at By are, Officer. approximately the and on an replay that updated would ended at investor on Hostess on The Hostess' Andy press number available being a website remind today's This are and the release a include will of is call you and will like to Hostess www.hostessbrands.com. statements. presentation forward-looking available discussion company's webcast that website. be

refer actual over measures. perspectives number now, of as factors the a a to If differ to The most update statements. see to measures. useful the company's you financial release company Mr. underlying And obligation forward-looking no turn company's these SEC of of from or a company non-GAAP the forward-looking Callahan. its to reconciliation discussion Please Hostess' call to references revise make the full as results Andy earnings recent these cause will most remember measures well has filings, with GAAP investors that I growth will to statements. company materially non-GAAP undertakes believes these could you that trends included and comparable will the provide release business The in of on earnings the measures financial will

Andy Callahan

then today. with our quarter morning. offering in it begin the over Brian results up performance good emphasize first discuss a up it of it and I second you, first In us to and in am fluid to few outlook Chris, Okay, We we’ll our to appreciate extremely in will I wrap team before of financial entire from growth Hostess environment. a business. continues and profitable of heroes’ to by our detail revenue the opening you strength strong very leading short, consecutive execution our questions. to Hostess the you greater turn discussion reinforce of a quarter and our into quarter. our of highlights like XXth thank growth for I’d joining momentum our strong proud quarter with

position marketing a strong and results proven testament Our of are building the insight today to in against snacking playbook the Voortman efforts; building strength continued a the of and occasions; and talent Hostess leading the tomorrow. merchandizing brands; for and remarkable Underpinning chain to execution the latest of service and our very daily investments; supply to outstanding and our execute impact our consumer customers, data momentum who on are Hostess basis. growth foundations is profitable consumers the while executing these our results, our

elevated, we consumer our our channels Goods distribution consistently had point-of-sale of of based greater before our in and few and of X.X% XX.X% Sweet Sweet faster-growing is up year broad benefit in model the consumer growth growth, as Hostess Voortman category, store are drive again, XX.X%. velocities. Total branded continued strong resulted growing stat during also as increasing market compared demonstrating the to net performance highlight deliver again contributing a quarter. basis, ago. points the growing lap versus providing and X.X%, stats revenue versus points foundation mobility category well, XX.X%, XXX are before year with led Baked growth, in for strength growth solid grew to On nicely achieved occasions XX% products a revenue successful strong, point-of-sale as a up basis driving gains our two our the innovation color are growth X we A Voortman strong foundation continues stronger. increased Voortman share occasions Net of contributing point-of-sale of Consumer strong COVID. direct remain growth. and from once overall both by growth in the strong of execution multiple LTOs year distribution results the on Insights over The X.X% growth. continued getting sales is We prior model. results. with the demonstrating improved distribution to year-over-year across total our sub-segments. quality snacking for X our year profitably snacking demand to cookie in solid I sales points and and our was and X% Goods two contribution contributing quality new to exemplifying in-house Baked takeaways and very provide and transition

big continue their with has good off two Baby Bundts which to starts help launches Additionally, momentum. Minis, QX to a are and Crispy both

results. strategic created consumer distribution for and help remarkable. XXX in simply touched market focused advantaged Our of needs to with decision share and was and shelf The points C-store, of gains basis the We in XXX success innovation model the format our XXX, highs quarter and channel small share warehouse drive respectively. customer our for the drive these Drug, Dollar new year-over-year and expansion, impressive

vaccinated and for consumers are mobility the communities We are restrictions. lift continued positioned increases, growth as

to on innovation. Now

and of up Hostess our new basis to like our breakfast Sweet expect XX.X%. These realizing and resonating insights and to end. select innovation gains. products three XX% and growth by for curated previous our has in to critical been strong core rates cream our Baked While share across initiatives is contributor in consumers. the item has strong Sweet Bundts target of of at year of growing Honey market innovation are success. years to are occasions of tethered proven consumer and vitality our successful and very our Cakes pipeline, than fast-growing updated previous as profitable which them including start to leverages very Goods labor, Shifting drive cheese our Baby Danishes. by with us performing incremental point-of-sale growth Grounded as innovation XX.X% Danish, multi-pack launches Packs strategic XXX offerings we performance Buns for Hostess’ occasions, well investments year more our breakfast base perform specifically Donut breakfast towards the and more growth use tremendously with distribution our to Goods all a These is steady key Donettes, continued consumer early category, Strong packaging Our Coffee points is consumer, build Snack Voortman’s on-the-go to retailers, introduction in to convenience XXXX well well of consumer Baked to insights

reception. business early eat summer launched Minis positive interest occasions. a important quarter, that reopen. During mobility the key we position driving on-the-go, season, tailored we pipeline we as weeks, Spins on our the heading showing both good all with believe national new and C-store and Muff'n at well to into Longer-term, are we strength Stix innovation confident the capitalize and to our home partners retail have increased core are Pecan Crispy us snacking economy and best-in-class chain. the our products in continues recent Voortman Again, we Mega launched with consumer in Wafers to

sustainable four efforts. young establishing consumer household help remarkable families; to merchandizing penetration Reinvigorating quarter growth. We potential. are growth our and results icons, Underpinning priorities the for Voortman’s growth; and with on focused position our success the growth innovation C-store continuing strategic of key growing that optimize deliver this distinct will is marketing

and partnership strong our for to We our and the our data helps market channel over consumer drive in Hostess instrumental share convenience steadily able mined incremental sales growth program are been last the channel. year have through continue profit through as retailers. to have the insights the we we increase partnerships in our and to evolving the leverage in maximize the convenience These strong demands managing leading

these the pay-off seeing and expect to We this are continue. partnerships of benefits

performance Dollar impressive. Our channel is

Our channel our XXX as quarter platform points XX.X% the revitalized grew and shelf customer service. driven basis strong by Dollar expansion point-of-sale continued sets, grew we and of partnerships breakfast in share

as partners the that channel in our our develop product seen beneficial programs with to assortment quarter mass mutually merchandizing implement changes and work to this to we and continue have sequential programs. improvements We are new

love. have that consumers iconic brands We

benchmarks results. We look pleased our rates another foundation on great and through encouraging that very proven committed confidence trials lever executed were that the we toolbox. growth end, we handful are investments advertising confident during formidable delivered with drive our of us on forward, advertising marketing trial are we to will providing a and growth our we return future already growth. can spend above e-commerce programs To well that of unlock building targeted As incremental quarter in the that response each deliver

ACV, in increase expanded of by point-of-sale since by Contributing to our pay-off beginning the we channel, X points nine channels, for Our grown XX% point-of-sale the which Sugar-Free, are the which X.X% year-over-year. grew fueled growth the points. with by particularly, total merchandizing all also improvement growth good is within across acquisition in strong the Voortman quarter grew total efforts have grocery Voortman as which Voortman accelerating to

expect awareness innovation marketing We and to targeted more programs. with to continue drive as Voortman drive in we growth introduce

great make strides ESG to continue also our We on initiatives.

Board operating our a to Hugh We were who continued and of new valuable forward as to and of wealth Board experience ESG add retention including our with thrilled Dineen, be our move them Beck have Olu model that two goals on knowledge the very our also organization to We diversity. we embedded journey. will in bring into focus Directors, and Members

continue recently our announced Officer. Vice Kraft, valuable Growth for to profitably Prepared grown most Tyson Foods. as and team Dan Dan Foods the he experience where Tyson also Chief addition was and build at week brands last iconic Senior We and having of Manager President of Mizkan our O'Leary General management the brings

have revenue are at to again closed We growth Dan We once on QX and delivered Hostess strong drive into important QX industry-leading momentum. margins. are with board leading initiatives. headed excited our help to growth

guidance. year the in well-positioned full in to early are dynamic our on very market, year Although this deliver we

efficiency the employees, to detail. profitable our greater in to results it a agility consumer dedicated and over We to highly will in we needs to continue continue safety I’ll And quarter’s catering financial of turn while with with manner. execute through loyal prioritize that, the and go to Brian

Brian Purcell

It’s privilege speak Thanks to quarter a Andy. strong of to results. another

our between of underscoring This was quarter single business both in contributing in from points $XXX.X XXXX. of power fairly sizes. model. another growth the warehouse balanced to an shipments with and brands quarter revenue in As Net Goods in Andy for of and in growth is Sweet increase this Goods was mentioned, growth as robust the remaining increase serve strength the X revenue saw DSD model our of primarily X million, net growth. continued on of strength the X%. represents transitioned points to lap due Sweet a POS Baked and of across Voortman favorable The growth, multi-pack timing Voortman we Baked We

our serve to share single approximately points. saw XX%, convenience, Our accelerated growth we by strong where in XXX performance driven basis gains POS of

grew the quarter, last bump multi-pack business bag channels. our Our X.X% Dollar driven by grocery in and lapping of at the year’s and donut COVID end growth of the despite continued

period. Importantly, profit mix remainder XX%, point-of-sale business. margin points prior was and of gains basis gross for core $XX.X achievement the realized at productivity was driven efficiencies. Hostess the and the million year than higher half driven in margin synergies Gross the the our is by of expansion in of Approximately, the growth by result while Voortman share was across a XXX quarter, business favorable came the

As we and due realization operations expenses anticipated, to and notably to were the prior of down for in million XX.X% of incurred $XX.X the year integration quarter, conversion lower Voortman’s the first synergies. cost operating

mix, as XX.X% Voortman allocation year the of tax was to discrete compared was million, related excluding accretion Voortman. eliminated a XXXX. share, The interests XX% were year. compared in XX.X% volume million driven for million down including prior of XX.X% cash non-controlling had at At $XXX.X of the as by times of an for net leverage of to volume the quarter diluted Our revenue, XXXX. the strong taxes per quarter. of $XX.X by Net period ratio effective quarter, favorable strong over million and adjusted $XX as rate, was higher Adjusted and by effective and quarter XXXX, and income was for during model million deferred X.X or prior the Voortman, net driven prior fourth the was which net Hostess end we as items to EBITDA $X prior times in EBITDA integration in result impacted to of tax $XX.X was increase flow QX or higher operating revenue of with efficiencies the year of EPS The the $XX.X the of and $XXX.X operating increase cash $X.XX branded a of efficiencies result year X.X warehouse higher debt income XX.X%, the the versus EPS and rate our was well write-off equivalents for period from and and transition Adjusted and revenue growth. the $X.XX. from the million operating a million net

Turning to outlook. our

Given the strength to year, the how guidance. we achieve we in year confident ability increasingly our started of full are our

to million of $XXX revenue X.X%, growth to to be between per EBITDA net with to and EPS $X.XX expect continued expect adjusted $XXX to at We drive $X.XX adjusted be share. and million

the as move to manage ability of Looking through we forward, remainder our confident year. feel margins the in we

visibility pricing productivity. good to with and cost have We balance

absent seeing our cash or sheet Additionally, operating our related approach year serve we times leverage From is increased as fundamentals, will confident benefiting end channel any mix. by single M&A consumption three which on mainly we given hand, healthy convenience and strong buybacks. feel strong lap balance a material Voortman, flow portfolio, that our are the across we transition to cash in cost perspective,

such turn for which and full our Longer the continue a to almost remains business the investing remain future the to a ramp committed to for value. we support half delever strategic we as on in new make year. in XXXX, growth back As shareholder line growth generating in term, in cake help investment of track the we investments

in I excited are comments. With by us team’s that, opportunities ability call our to the the ahead confident We back to and turn deliver. for of will closing Andy

Andy Callahan

providing occasions. will brands snacking growing levels; with is growth to strong consumers expect realize in propelling Hostess foundation Brian. and are demand well-positioned agile and as on-the-go in and sustained snacking overall indulgent Hostess growth. strength growth to snack our model ahead for states XXXX Hostess increase that in-home meat Thanks, simultaneously of solid of of positions The throughout In their a and and availability channels, deliver occasions has this beyond. the we elevated well-known in sustained Terrific. XXXX, increase continue business breadth our Hostess at positions opportunity. mobility, brands, across for leading

is and capturing for affinity Voortman, ability addition through track record Our of innovate strong foundational like consistent to to successful this growth. grow clear the execution, to in consumer acquisitions industry-leading Hostess Brands

to work to on continue will foundations consumer our customer and build forward. We going

profitable to are We deeply growth. long-term committed shareholder value creation and sustainable,

positions shareholder move growing forward, flow we to well As our and unlock value. cash strong us

reinvest that, to we’ll will We for as industry-leading growth strategic flexibility shareholder value. well available industry-leading are support our pursue to to remain opportunistically returns. maintaining to continue We margins, strive of acquisitions, your while and stewards the I enhance And at reduce business and always optimize leverage, questions. in shareholder with capital the as Brian

Operator

proceed. Evercore Our Instructions] from question Please David [Operator with Palmer first is ISI.

David Palmer

Thanks.

reinvestment And us the reinvested could includes give your you terms and the nature I entails that. and a And I reinvestments, the advertising in analytics. have how that data in what think sense those marketing of know you you on in would generally a of you your of and follow-up. reinvestment question about of part be much first I mentioned, levels guidance year? this But expectations making don’t The or are quarter?

Andy Callahan

for years and been businesses the way really and Thanks the that. investing take I’ll the our David, with that we consumer. understanding foundation building build for Yes, question. starts understanding We’ve it

started our quantifying early. of those So shelf we’ve customer by occasions. in understanding understanding invested just occasions, We occasions, drivers set

that build We’ve that the and Growth, convenience was channel the first store great Tina, one what shopper we they through lot decisions that’s understanding and made to in in insights Innovation also first outflows our and – moved up team greater a of investment investments. then, off and done data consumer remember, convenience of their in Head shoppers incrementality we shop I you We’ve around taken the of and around the our consumers. how year more across the the we well. last Dan with are then of even coming an of now consumer one have my calls, the around that then, If of paid and and invested over board similar

it as we’ve are talk, as move Brian This let that, we investments. spending that build we we successful, a go, look and and we in and a kind it. we don’t quarter, Hostess, up had we validate is, will We’ll happens, well marketing, very go but and taking of continue as it. we us way to put I’ve do through see have e-commerce line we SG&A when that businesses our had forward, do lot news large that in concurrent build on deep modest you invested I’ll Voortman that inefficient was them in But good we lived the it forward, then the – was with heavy when come it growth build out. as are we now, for there when off as both and that it’s a some where to

We in of all have that growth us. front

we drive consumers and So, our validating continue investing customers about and then growth. in excited really to to in are

So drive Brian, them and to then market anything It’s some have. in the modest on – lever on when increase get where another and build that? is. got to we growth. That’s foundational that’s around believe continue mostly to testing really with our that consumers it to we it’s we

Brian Purcell

Yes.

spend. look quick prior up up about year, a - versus Last we expense, million, $X.X at ramped kind marketing and were you of $XX we A&M million year. numbers couple if and Just our advertising

with line year-on-year. QX, just in largely was it So, of kind

stocking incremental to SG&A well, as there. is a to any bit some There we there making are complement just with little levels. So is investments

David Palmer

margins. on then, quarter? you maybe of then, on-the-go margin a quarter those? thinking mid talk we of with in can terms mean, And a input the perhaps mix headwinds some headwinds what gross costs. about I headwinds whether regard gathering And you your lot color also, with in Thanks. not tailwind just the the could see first the Could supply year growing, of gross weather line, and had you through on companies to see but chain, that had from some Great.

any we be gross think should would this helpful. cadence So about how versus about Thanks. thoughts margin quarter

Andy Callahan

I’ll David. take that. Sure,

the we timing QX, when the of in DSD to at look transitioned base or was and Voortman from the we if lap model a yes, also Voortman. expanded function the largely margins both So, with we the business warehouse. warehouse

So, we roughly a seeing points. you seeing, business look chunk we of getting of absorption XXX margins basis if our And that our we are productivity. that expanded it’s mix, and that in the some volume at driving we are are

as But little we offset we productivity neutralish we of inflation. sort offsetting standpoint, look expanding to where on and would pricing I based to are margin those items are So, seeing items, are inflation the have maybe inflation. expect forward to a the bit from year, would favorability I say, of the to those actually visibility point with we margins. a

We inflation. are seeing

pricing production model transition April, One we have QX We a are by confident seeing did a but get certain to pretty lot with areas everybody saw we year, can more beginning the big we we remind margins at we offset tick to that efficiencies. Voortman, pipeline year, did just of up the elevated in warehouse that productivity a when and little last very we mix. is, of the callout, of than in bit driven filling the are

of with the there think mix. of in and a expect then can pricing, I inflation as by QX would be balance said, margins and I I So, year, potentially headwind Voortman and to QX that productivity actually we offset lap the driven the

David Palmer

you. Great. Thank

Operator

with next proceed. JPMorgan. is Our Ken question from Please Goldman

Ken Goldman

data great. easy thank start do it story in going Is doing level? sequentially in mass to be ahead. progress, you. just losses year we some we in with assume Is if from think sense total comps you’ll channel Obviously, may? share that? what trying the have fairly I at those Hi, your of Or you some are share diminishing. how that a do It’s the good get we see about share Two also these the channel me, looking to losses it share fair your of regain to lower for to or mass that be should measured get? share Andy, in to as the is that a share the customers? Just

Andy Callahan

Yes.

strength agile just is So, across our comment, talked distribution we’ve that about a this board, based broad maybe our the model. one in of

of is, grow continue why spectrum. So, continue overall to the one we to channels, across broader because expect we a just our because snacking grow we and reasons the share to business innovate

growth. committed to are investing We category in

in do doing it do insights. by are with We capacity. investing with do We consumer. We innovation. We in it by investing it

that’s and are to invest invest the board. the food to long-lasting partnerships in growing we our all I expected mass So continuing in in convenience of with customers. and are sustainable true in across we continuing expect capacity channel,

would time, share. expect to over So, I us grow

is, Now in The channel may. time, one any impacted differently. headline we every every channel any at improvement. one see to model expect to continue COVID I yes, and given

So are not making to it’s our progress time, expect category one in be that and brands investing yes, the customers. over us may we with Ken. grow across now team in do see you we that’s growing this we to that committed share. the quarter, in And because with making would and one really continue grow expect from up. Yes. board in what and I to And in grow partnerships would share, we sure are long-term consumers’ model we committed all channel our of channel. time, and over And customers our but great to brought or us and month, happen continue great absolutely, to to are expect every continue and to and Thanks, problems we to our that us that investing expect solve are investing we

Ken Goldman

– quarter, that. if that think cost mentioned all am in incorrect, inflation last in okay. range. that I you And X.X%, Yes. your be thank similar Well, for not then, Brian, X.X% I will you Okay,

the are looking now? number? having You talked an about you What’s for update some on up. inflation that there picked range Is

Brian Purcell

Yes.

So, in the think, a year. kind certain our at little I do the We of guidance. maintaining saw what guide areas we we our overall, higher are of than, total, see inflation beginning of

transport bit. is a So, up little for instance,

are pretty looking looking at a situation, space a are in labor as of dynamic We which companies lot well. at this

So we've get about also we pricing, a about monitoring beginning got is is working think think, productivity visibility increases selling good feel so as little ticking better we our comments. in we we for we on are year. But, We've that. talked great also versus – price mix what inflation I of bit up of a upfront again, the us the been visibility do And the the in. saw But it pipeline. originally we at our

collectively, the feel good So, in we to guide we gave. EBITDA where that ability the manage that implied about we line with guided

Ken Goldman

you. Thank Okay.

Operator

Dickerson with proceed. Rob Please question Our from Jefferies. is next

Rob Dickerson

like lot do I of period. guess, guess, but tell heard so to Great. much. color pricing to around We've kind already you you respect some, on a Hi. a this more are just just with good follow-up magnitude to and time timing? companies any sell QX in speak starting of even maybe have the Thanks, the question - I visibility,

be gauge, exactly to you a Thanks. through what talking year? have not the is, I more an bit or for get likely in then, about less, idea phasing is obviously, or kind that just And bit to reasons just would this we past, similar a of to go going you are of to can want tell pricing how about us when think the how you you little you seen competitive pricing, – pricing we but little this So helpful? the of what understand anything as are trying provide really maybe why

Brian Purcell

Yes.

From standpoint on from process and Yes. I'll take Andy sell-in timing alike. – then, the just add So, a and can a that. color

are take see of hold We pricing back the to expecting in year. the half the

beginning timeframe, in the of really in QX. the QX starting So kind at

are the we different we in still – channels sell-in. So, in of are process the

are number. to we expect of – pricing give So QX of can't kind we the take – to the at timing a hold. exact standpoint, you, beginning we the But for from

Rob Dickerson

Got it.

And strategy comments think revenues, right? stomach enough. try smaller curious, not of a LTOs in only Fair mobility, guess, smaller maybe just drive there different you but shelf, you share is you Especially, with stores of driving the in in mildly just to shift this go-to-market Would you kind say Okay. mass taking of you as a opportunity the are to around mentioned coming given anything you market? the then, in number the format for also share you format and in view sure Andy, had QX. make I these couple core stores, as like and of Thanks. I

Andy Callahan

Yes.

Just Appreciate a couple things. Thanks. your comment, Rob.

a the in which to occasions category is we brings and innovation consumers' grow a to specifically occasions multi-pack that our we looking we from to very need are mentioned sharper. business And much brought increasing. assets As have are that a on-the-go rate snacking growing the more for I and are that, taking highly more are also we able grow maybe developed why playbook execute and at a understanding tailor an our snacking, earlier those greater occasions of purchase well, our when all where continue are and share. our which consumers is than with are David's in-home, total to versus, build home consumer either believe insights They for occasion question, I of or of able home

or Minis, know, -- that have you flavors that and forward, one Mega consumer. are other and we the all curated have, consumer then, the for are expanding. which the are to finding more be we've we things channels is or which obviously, constant specific and methods. at going or mentioned, things the we great done as for, of to early more different that. that And So, are taking, who getting that so that actual for talking on they advertising we is testing either customer is to And this steps starts. taking ideas the are like And tailored some designed more feedback on-the-go into tailored innovations we Baby our Bundts, state. more occasions on-the-go looking Voortman other Crispy consumer is Wafers, off are them needs that we Brian are then through

So, together it. in - find occasion in of are able able consumer to that an successfully consumers want to That's together we're very flywheel be grow what building. invest be put the we trying that the putting they want and to to then efficiently that's we ecosystem growth the and

Operator

Ryan Research. is question Please with Consumer proceed. next from Bell Our Edge

Ryan Bell

about Hi. everyone. future little Could the practice? for It's has pandemic. about work of And at-home the Good we a then, forward? more that a morning environment, to into your bit expectations category benefit as you clear a talk you bit think what a get occasion breakfast going of about do some How normalized forward? to could been from incremental maybe, there indulgence going start the it home given mean

Andy Callahan

Big fan occasion. of snacking. call Hostess it in-home We breakfast. the during AM Consumers breakfast love

state in So different there around breakfast. occasions need is

that breakfast and We we were has underdeveloped remember you grow greater to demonstrate was that it made commitment a going at So a three ago, our guess, is research about in about, two-and-a-half, if occasion. I years continued to the to occasion pace.

our are XX% breakfast above that took. now a we driven to lot of up breakfast those the initiatives were grow shared by fair and We continued We share. quarter, in in

to COVID do in-home to As down increase. We do snacking this we out to expect not go mobility we obviously pre-pandemic levels. occasions of come expect of environment,

we and them are in to We'll continue a be very expect positioned to – to maintain, some be expect that that breakfast have level to result, items well. continue elevated to both expect we've of contributor occasion be the occasion We our we investments in-home to we as made to to core and the the because and a that specifically because meaningful there continue around of that growth, will innovate occasion. of at bring innovation

Operator

proceed. with question next from the D.A. is Our Bill Davidson. Newby Please

Bill Newby

guys, the on Good congrats start great Hey. morning to year. a and

Andy Callahan

Bill. Thanks,

Bill Newby

a Goods seeing And and is this back will low that quarter, if whether at I any little especially look that difficult end maybe, appreciate thoughts still that – wanted bit comp. just I of I follow-up or I another an maybe I above mean, – that guess, we fall you Andy, the about further longer? kind I there, single-digit can bit in growth a go this mean, touched of post-COVID on is just Baked I ask guess of multi-pack category And at where growth not. little it strong a on Sweet going there. talk little category after very indicator the into we're I the to range lot but there, to guess, a multi-pack kind growth. sustain it range

Andy Callahan

than consumer But that talk are of Yes, stay. occasion there the expect am states, breakfast in all consensus, for to would perfect, greater myself I COVID. I expect the included to a out rate because I grow for I historically because and and grow. there I it is a for expect meaningfully to going it projections we going expect I occasions look better good not emerging growth to to that's is believe be continue models that to – an of and where meat morning I stay is greater where more overall for to territory that snacking, sure, going -- that Hostess we related overall occasions food. into compete is at in would versus morning, grow good are expect the an that, grow snacking category, to rate the than but going it are it. in to coming at would – all elevated broadly share at for I we there visibility. would sweet changes to for And that And breakfast, I'll likely think forward the going to is overall a behavioral relative Hostess and for here that specifically was. say unchartered has in-home therefore, specifically, Hostess

our happen to positions all marketing which and it's off innovation and area. that us going our expect of So, we've insights invested And that to continue in I paying well in continue forward. grow, and that to to our is why

Bill Newby

three lap helpful. would to strategy how seeing then, much relative on on they've I here of start assume trial maybe ago? the you quickly to months and start we promotional Super rollout I that's just guess, I developing guys guess, try to And thoughts any expected developed whatever as one providers COVID. Great. that environment And have happened what last and retain you what year? to are

Andy Callahan

Yes.

as well, level, to That speak spending it's growth ago. good a more efficient true. efficiency, out are we to promotion can but know, had back, which our adjusting drive ourselves. of funny, coming were is, there to a happened, We COVID it's promotion. taking put drive models what back is you plans prior only So, was seeing even timing. We and kind we but didn't – Promotion is a I being at leveraging for year really in was reduction

Our category support brand. grow it our consumers to and and our the continue for at the customers – for most intent the and is do efficient to growth

have We are So – promotions they coming were more that they believe bringing we efficient do back. are before. than we

entire we promotion the base are pricing we the revenue going in half. that's mentioned back management come bringing marketplace and pricing manage both as earlier, to need and to You into model with the

more do I Hostess. going our expect efficient pre-pandemic. the come was back And level but not for to that's believe efficient than It customers So that at the normal for is and for it would – to model, everybody. more I it's

Operator

next Our with Andrew UBS. proceed. Please is question from Olsen

Andrew Olsen

build Yes. Hi. Good just morning, there. just guys. comments on Andy, your to

guys to are bit back more slated half. you that the Just pricing the talking little in on take a

think price less levers you pack you a from pull on pricing high through like do I'll like channel about on. based can do revenue And channel, vary think through different then, in how pricing levels as about that price think versus how how the management do those that Just, pass architecture? levers level, by channels? the it's with whether And it you – growth you

Andy Callahan

Yes.

in We've to do for And that do seven efficiencies productivity that is like which you things, relaunched. input it's our we years other the do initiatives is offset base remember on other we portfolio since I we of this to and of is architecture, But and why all years a of our lanes, some cost the portfolio reason done able over and price in that natural day of of a sorry my price the trade pricing to elements that because our six not price pricing the part time manage three haven't goal. of our prices, -- three done Andrew, And haven't been progression multi-faceted things years, we've of mentioned about or been inflation able done parts pack try every versus So, managing efficiency lot. getting there these supply - talked work, and all changing until pricing ago. a haven't we – we've the to we foundational chain, of the our we efficiency. that's on but

good be to ability goal drive our Our that's able for to growth.

now are category. part we the portfolio So to relative prices. healthy pricing is doing the because efficient prices of thing thing right the for now it's input category on as the do and to measure the It

in productivity run out looks mean, The at the taken. at point line We plants. your we every all down programs. pipeline of those we well running looks a a packaging efficiency every what formulations, look day. but revenue at price sizes, of product that I pack is, mix, and of our we multi-faceted have call So, way architecture day, -

it and every channel, we the by by things to have day. at of comes All team all does our looks very That well those model. goes are form. into efficiency When the elasticities data, initiatives that

that we the very what elasticity impact predictive we on going is of be be the our So think to going forward. on pricing can

into to pricing. built So that's forecast related all our

– good reflected Assuming the the marketplace growth to impact to forward a is that, on well Brian? as side, going that Anything profitability our in have on as the believe we very pretty we gets visibility what in we correct side. the both models, have build a

Brian Purcell

than, you play other pack across certain that ability channel changes. managing the pricing themselves differently. think, does out versus channels I different versus different asked and us the list that channels price No, trade, to to obviously, price - by across and at lend market, pack manage perhaps price is what channels it our and We Andrew, that look

basis of kind it appropriate of, at well. particular which what look do in gives on that a and kind channel-by-channel think think, us bit channel, little we we time, I runway of So do as also over is

Andrew Olsen

Alright. Thank much. you very

Operator

Stanley. Kaufman question from next proceed. Our with Please Pamela Morgan is

Pamela Kaufman

good morning. I Hi, would…

Andy Callahan

Hey there, Pam.

Pamela Kaufman

how the has much over as household the among during by I driven things an the are of the into Hey. – thinking insight been much consumption about retention you pandemic increase increased how households Do you how growth have households? of versus year existing any last growth the guess, new penetration And normalize? in

Andy Callahan

our retention broader been Yes, penetration Household of extremely households a actually has so, is the of more new long-term metric. well.

our able then, up it's been households were – flows, have on the of to early it flat. We based some the we back and And gone in pandemic, kind increasing of goes again, merchandizing the in because rate households We then more into our overall just at converting a were early multi-buyers access we increasing households. to pandemic, were consumers. than greater frequent But those category. the of

So are we that increasing penetration.

look advertising consumer. we growth find that also when at our our We

via are our advertising. well very consumers We acquiring those

to lifetime to very value consumers ability well. long get able So, our be the

really growth feel access our long-term – to we we've with good consumers continue number, both as and identified, important well. to to strategically about overall have with we and that not that it's overall the drive our just So, the growth it's tools consumers

good feel that. we So about

Pamela Kaufman

Also, the stable of quarters. year, you couple talk Voortman’s on? level course about the the they somewhat performance about thinking over initiatives looking can how over the at are last Just executing you of of that growth the you're Voortman sales, various been absolute have given

you on Or maybe to guess, sales color we up? as on some there. cadence expect I strategy So, start to see should growth execute the those the ramp

Andy Callahan

looking what – you you mentioning are at Can stable? Voortman’s when are you are that sales

Pamela Kaufman

relatively over level stable. last couple I sales quarters, looking the the of at absolute been guess, sequentially, they've of

Brian Purcell

Yes.

little business, move year I the a looking more to we sales are runrate as - a basis QX, with the do seasonality is as we there throughout to QX. in So, Voortman, the build increase. absolute for on an probably expect

Andy Callahan

Yes.

it's Our plans seasonality on for grow the headline. sequentially to I Voortman And guess, different. the

agree I Brian. with So

Operator

with is proceed. Scheuneman Please Morningstar. Our from Rebecca next question

Rebecca Scheuneman

Yes. morning. Good

on And colors that how the are as to and about to would Are you there your are lot innovation. from? are study other usage that consumers like, are such digging of you traits hear, systems doing some you understand I also, also what a into, sharing types are of that for occasions? thanks you talked sourcing love seeking? data-driven data really So, the that data

Andy Callahan

– use at sometimes or understand common are We the segmentation are as behaving, we they take really to of tools disclose industry. are we to we consumer And level with can that at that deep it. look internally don't we behaving Yes. partners, we tools they our different it we who then, very way, and then proprietary through it how mine in at the the either a lot of

we'll data So, take from our partners.

sources will Our take Nielsen other third-party. partners data. We'll of take the

media Sometimes with our take we who partners consumer a we with. We'll them buy off. work

we to tailor proprietary the what it leverages not necessarily our segmentations we are we approach why that. to we doing reinventing on get once in insights motivation in business drive then to but the able specifically that our or do So industry, consumer way the is a and an the work own it and be to

Kraft and having we learned apply very other I to we a and – at time we what with larger claim now trying segmentations terrific that of it doing going as how and there. partners do and a reinventing great people out we think Tyson, good apply analysis, with and it’s but So, it companies a probably – we And are the talented lot Hostess. really marketing to collectively And to not are team or much teeth are we doing well. lot it as brand having they are with a cutting am we do spent with the a lot Hillshire, my of of

really feel good approach. about I So But our that's that.

Rebecca Scheuneman

color. the for Thanks Great. Okay.

Andy Callahan

Sure.

Rebecca Scheuneman

brand’s And the great can that secondly, expect wondering opportunities should the does? that? am towards Or how we just Hostess I XX%. the you've a I much to lag their XX% about of Does ACV you expanding the lot some talked know have same gap. Voortman that Voortman Hostess brand it close potential ACV

Brian Purcell

growth with Hostess it it over Voortman we're the time. nearly has in But – ubiquitous You the would are to not. both Voortman Voortman. we expect mode in awareness, lag and does Hostess

in with consumers the we different advertise both and build do So, when brands, it approaches. we

is follow. Voortman about and the lot building then So, the ACV a having awareness

So, think get only about should getting you we XX%, will eventually there. what to

going to there get next not are year. We

both to we And Voortman, leading in extremely the as with of Sugar-Free not growing And when then, there runway benefit is share is grow in and with going one to Voortman the are going Voortman, also innovation. grow. consumer occasions. in which for the then, areas I segmentation cookies. We that then, snacking the do consumer cookie competes growing It that faster growth are Hostess also at we get drive awareness. gives the us and its And growing continue to year-after-year Sugar-Free to with is business, real and two going Sugar-Free also greater we well being long to within Voortman and are simultaneously years. invest probably the than continue it's But number a to overall going talked overall two-times importantly, in our is category, lead. those about

runway a be build to So, awareness, build expect long growth. we availability for as that and we

Operator

the turn our Andy to would reached of Question-and-Answer remarks. back closing for have conference like I end to We Session. the over

Andy Callahan

interest Thanks, Great. and Hostess. for everyone in your participation

playbook we that half this the deliver we we to in. many proven the the to continue from are position for are see come. can back today, in year in when hopefully over went confident the we of the stronger have from years you've you and we growth both results, As a heard tone the profitable our and long-term, talent, than to from pandemic And increasingly emerging believe

again appreciate work I hard We'll and you. it for see you in. thanks dialing quarter. will we So, continue for next to

Operator

does Thank you. today's conference. This conclude

and thank your disconnect may participation. you You time lines at this your for

Hostess Brands (TWNK) 17 May 212021 Q1 Earnings call transcript